Case Interview Prep

Answer - B - The statement of cash flows is the financial statement that is prepared after the balance sheet and the income statement, as it requires information from those two statements to prepare the statement of cash flows.

Key Takeaway: A balance sheet can be prepared at any time, as it provides a snapshot of the company’s worth and does not depend on information from other financial statements. The statement of cash flows uses two prior balance sheets to compare data-such as accounts receivables-to show the increase or decrease in the account as it impacts the cash flow. Operating income is gathered from the income statement.

The statement of cash flows consists of three sections: Cash flows from operating activities; cash flows from investing activities; and cash flows from financing activities.